So you are done with your 52-week challenge, now what? The 52-week challenge is a challenge to improve someone’s personal finances by teaching the challenger to save money on increasing increments over the 52 weeks. Some people go into this challenge with struggles because it is not easy to cut out some expenses that you already believe are necessities and do it on a weekly basis. Well, anyway, that is the idea; to re-calibrate one’s understanding of necessities and wants, for the challenger to understand what is really necessary, what they can really afford and make changes in one’s life. In the next blog posts, we will be talking about the challenges of the 52-week and how to deal with them.
You might be wondering, why would we talk about what to do with the money from the savings of the 52-week challenge when you still don’t have the money? The reason for that is to prevent you from doing the 52-week challenge and then waste the money that you have earned because you do not know what to do it. It’s like, I am just setting you up for failure. Let me give you an example, it’s like, you understand to cut off Starbucks coffee on a daily basis but since you do not have an idea on what to do from your savings, you decided to use that money to buy Starbucks coffee for the following year, it’s like, you did not have a takeaway from the experience. You are just able to prove that you can save money for a year but that’s just about it. So what to do with your savings from the 52-week challenge.
1. Get a part of it and reward yourself
I suggest that you do not put you eggs in one place. I still would recommend for people who did this challenge to reward themselves. It was a year of cutting down on cravings and luxury, so I believe that it would not hurt to get some of the things that you gave up. I would say at most 10% only should go to rewarding yourself. You can go on a vacation or eat at an expensive restaurant. Whatever you do, it’s up to you. Just make sure that you only take 10% of your savings.
2. Put into savings
If you are really not sure what to do with your savings, remember that you are not required to spend it. You can put it all in your savings account. For whatever reason, we hear people say that putting money in the bank is not a very good idea because of low interest rates but if you are going to think about it, it’s not a good idea to spend money rather than putting them in the bank. It’s nice to have money when you don’t need it rather than have no money once you need it.
3. Invest
In my 10 years of working as an employee and 13-15 years of saving (yeah, I have been saving money since I was a very young girl) I do not have a very impressive savings account, that’s because of investments that did not pay out well, debt payment to impulsive credit card usage (I used to shop a lot and spend a lot at the same time as well). Even though I have recovered from credit card debts, I still do not have a very impressive savings account but the reason behind that is because my money is all over the place. I do not just put them in one place, I invested some of them in the stock market and some of them, I started a small business of smoothies and selling bags.
4. Pay debt
In the hierarchy of financial needs (see previous post); you would not see the debt part but if you will see the post from frugal honey, you would see that it is actually in the middle of basic necessities and security, so what does it mean, you might ask. It is important that debt is paid as well. It is also important that after you paid your debt, you do not earn debt so that you can start getting out of that rut. I do not recommend to use all of your savings from the 52 week challenge but I would recommend to pay your debt as much as possible. I would say that 50%-60% of the savings from the challenge would be a good number to pay off your debt.
5. Learn a new skill
I think this is something that I shared in the past but the best investment is investing in yourself. This is something that I got from Fritz Villafuerte. I have a friend and he has been working hard, getting his degree in Business Administration and after that, he decided to get lessons for photography, now his business is still in its infancy but it has been less than 3 years and he has created his clientele already. There are some classes that can really increase your worth because you will be acquiring a new skill that will cost money, some may cost a lot, some are not that much but at least you now have the money to perhaps learn a new language and become a bilingual agent.
6. Go into business
Spending money for business is scary because of the risks. I have entered multiple small and medium size business and to be honest, it’s only now that I am getting the rhythm. There were times that my finances was hit bad because of these investments but that’s business, it would really be risky so I understand why it would be difficult to spend money on it but that’s something that you can put your savings from the 52-week challenge into something more.
7. Set-up your emergency fund
Remember the hierarchy of financial need? If you are doing well with your basic expenses and do not have debts anymore and you are starting your savings account. It is also a good time for you to set-up emergency fund. You might be wondering what’s the difference of an emergency fund from the savings account. In my case, my emergency fund and my savings are in one account. My thinking is that whatever is the amount of money in that account, 20% of that is for emergency. I would only touch 20% in case of emergency.
You can do all of this things or just choose one, just remember not to put all of your eggs in one basket and take note of the hierarchy of financial need to help you prioritize on how you will be spending your savings from the 52-week challenge. Hope this tips are helpful, please leave on the comments section your other tips and suggestion on what one can do for the 52-week challenge.
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